To consider a report of the Audit Committee on the National Scheme for Auditor Appointments (attached).

Report AGREED without division.

A report of the Audit Committee recommended that the Council join a national scheme – Public Sector Audit Appointments which would enable a sector led arrangement for the appointment of a suitable company to be the Council’s auditor. This would allow compliance with contractual and independence requirements and lower overall procurement costs.

The report was AGREED without division and it was RESOLVED:

1.    That the  Public Sector Audit Appointments (PSAA) invitation be accepted to ‘opt in’ to the sector led option for the appointment of external auditors commencing 1 April 2018, for the financial years of the contracts let in accordance with the PSAA procurement strategy; (5 years as currently proposed);

2.    That authority be delegated to the Section 151 Officer to give notice to the PSSA that the invitation is accepted.

Report attached.

The Local Audit and Accountability Act 2014 (the Act) brought to a close the Audit Commission and established transitional arrangements for the appointment of external auditors and the setting of audit fees for all local government and NHS bodies in England.  On 5 October 2015 the Secretary of State Communities and Local Government (CLG) determined that the transitional arrangements for local government bodies would be extended by one year to also include the audit of the accounts for 2017/18.

The Act also set out the arrangements for the appointment of auditors for subsequent years, with the opportunity for authorities to make their own decisions about how and by whom their auditors were appointed.  Regulations made under the Act allow authorities to ‘opt in’ for their auditor to be appointed by an ‘appointing person’.

In July 2016 Public Sector Audit Appointments’ (PSAA) were specified by the Secretary of State as an appointing person under regulation 3 of the Local Audit (Appointing Person) Regulations 2015. The appointing person was sometimes referred to as the sector led body and PSAA had wide support across local government.  PSAA was originally established to operate the transitional arrangements following the closure of the Audit Commission under powers delegated by the Secretary of State.  PSAA was an independent, not-for-profit company limited by guarantee and established by the LGA.

PSAA was inviting the Council to opt in, along with all other authorities, so that PSAA could enter into a number of contracts with appropriately qualified audit firms and appoint a suitable firm to be the Council’s auditor.

The principal benefits from such an approach were as follows:

·         PSAA would ensure the appointment of a suitably qualified and registered auditor and expected to be able to manage the appointments to allow for appropriate groupings and clusters of audits where bodies work together;

·         PSAA would monitor contract delivery and ensure compliance with contractual requirements, audit quality and independence requirements;

·         Any auditor conflicts at individual authorities would be managed by PSAA  who would have a number of contracted firms to call upon;

·         It was expected that the large scale contracts procured through PSAA would bring economies of scale and attract keener prices from the market than a smaller scale competition;

·         The overall procurement costs would be expected to be lower than an individual smaller scale local procurement;

·         The overhead costs for managing the contracts would be minimised though a smaller number of large contracts across the sector;

·         There would be no need for the Council to establish alternative appointment processes locally, including the need to set up and manage an ‘auditor panel’; and

·         A sustainable market for audit provision in the sector would be easier to ensure for the future.

If the Council did not opt in there would be a need to establish an independent auditor panel. In order to make a stand-alone appointment the auditor panel would need to be set up by the Council itself.  The members of the panel must be wholly or a majority of independent  ...  view the full minutes text for item 19